Italy court acquits S&P and managers in rating downgrades case

A man walks past the Standard & Poor's building in New York's financial district

TRANI, Italy (Reuters) – An Italian court acquitted credit ratings agency Standard & Poor’s and five of its former and current managers of market manipulation charges relating to past downgrades of the country’s sovereign debt, a judge said on Thursday.

Ratings agencies have come under fire in Italy for cutting ratings in 2011 and 2012, piling on further pressure after financial and political jitters sent borrowing costs soaring.

Judge Giulia Pavese read the ruling in a courtroom in the city of Trani, in southern Italy, where she also announced the acquittal of an analyst at competitor Fitch in a parallel case.

Trani prosecutors alleged that agency reports and ratings moves on Italy and its banking system were mismanaged during the debt crisis, provoking sharp losses on Milan’s stock market.

Prosecutor Michele Ruggero had sought jail sentences of between two and three years and fines of up to 500,000 euros ($536,900) for the officials, and a 4.6 million euro fine for the agency.

“We did everything we could. Now we will wait to read the court’s reasons for the verdict and decide whether to appeal or not,” Ruggero said on Thursday. Italian courts usually explain their reasoning within 90 days after issuing a verdict.

S&P, which had maintained that none of the accusations were backed up by proof, welcomed the acquittal, saying it and its employees had “now been granted the justice they deserve”.

Fitch said it was pleased by the acquittal of former analyst David Riley, which came almost a year after a Milan judge dropped a case against the agency’s Italy unit and its country head.

“We have always believed that this case was without merit,” Fitch said in an emailed statement.

The investigation into S&P, Fitch and fellow agency Moody’s was launched in January 2012, after complaints from consumer associations. The case against Moody’s was dropped later that year.